The shares of Figs Inc shares fell nearly 24% Friday in premarket trading after Inc, a healthcare apparel company, slashed its FY 2022 sales growth. It also issued weaker-than expected EBITDA guidance.

The Q1 net revenues of Figs were $110.1million, which is below the consensus estimate of $117.3million. Analysts expected 6.2c per shares, but the company posted an adjusted EBITDA of 5c. The adjusted EBITDA was $25 million, which is lower than the $26 million consensus projection.

Figs anticipates FY net revenues in the range $510 to $530 millions, down from the $550 to $560 million forecast and the analyst estimates of $556.5 million.

According to the company, supply chain problems and many macroeconomic factors like rising inflation and shifting consumer spending led to a reduction in its FY revenue guidance. Figs has also reduced its FY gross margin guidance due to a dramatic increase in air freight use.

Michael Binetti from Credit Suisse reduced the price target by $26.00 to $15.00. The analyst also reiterated an Outperform rating as FIGS is a “highly differentiated “disruptor” with low market share (~4%) and strong consumer awareness momentum to fuel strong growth for several years despite 2 major supply chain missteps in the last 3 quarters.”

The Outperform rating is based on the belief that “FIGS should still be able to grow profitably for several years once current supply chain headwinds abate.”

By Senad Karaahmetovic